Navistar International Corporation (NAV)

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Navistar International (NAV)

Q1 2013 Earnings Call

March 07, 2013 9:00 am ET


Heather Kos - Vice President of Investor Relations

Lewis B. Campbell - Executive Chairman

Andrew J. Cederoth - Chief Financial Officer and Executive Vice President

Troy A. Clarke - Chief Executive Officer and President

Archie Massicotte - President

John J. Allen - President of North America Truck & Parts


Stephen E. Volkmann - Jefferies & Company, Inc., Research Division

David Leiker - Robert W. Baird & Co. Incorporated, Research Division

Andy Kaplowitz - Barclays Capital, Research Division

Brian Sponheimer - Gabelli & Company, Inc.

Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division

Jerry Revich - Goldman Sachs Group Inc., Research Division

Justin Ward

Adam William Uhlman - Cleveland Research Company

Eric Crawford - UBS Investment Bank, Research Division

Adam Nielsen - RBC Capital Markets, LLC, Research Division



Good morning, and welcome, everyone, to this Navistar International Corporation First Quarter 2013 Earnings Release Conference Call. Today's call is being recorded. And now for opening remarks and introductions, I would like to turn the program over to Vice President of Investor Relations, Heather Kos. Please go ahead, ma'am.

Heather Kos

Good morning, everyone, and thank you for joining us for Navistar's First Quarter 2013 Conference Call. With me today are Lewis Campbell, Navistar's Chairman and Interim Chief Executive Officer; Troy Clarke, our President and Chief Operating Officer; and A.J. Cederoth, our Chief Financial Officer.

Before we begin, I'd like to cover a few items. A copy of this morning's press release and the presentation slides that we will be using today have been posted on our Investor Relations website for your reference. The non-GAAP financial measures discussed in this call are reconciled to the U.S. GAAP equivalent as part of the Appendix in the slide deck.

Finally, today's presentation includes some forward-looking statements about our expectations for future performance. Actual results could differ materially from those suggested by our comments made here.

For additional information concerning factors that could cause actual results to differ materially from those projected in today's presentation, please refer to our most recent reports on Form 10-K and 10-Q and our other SEC filings. We would also refer you to the Safe Harbor statement and Other Cautionary Notes disclaimer presented in today's material for more information on this subject.

And with that, I'll turn the call over to Lewis Campbell for his opening remarks.

Lewis B. Campbell

Thanks, Heather, and good morning, everybody. Thanks for joining the call. Before I turn to the quarter, I'd like to spend a minute on the other news we announced this morning. As you've likely seen, I'll be leaving my positions as Executive Chairman and Interim CEO of Navistar on April 15. At that time, I am truly delighted to hand the CEO reins over to Troy Clarke, who's served as our company's President and Chief Operating Officer since August of last year. Troy is going to also remain President and become a member of the board, and Jim Keyes, who's served as a board member since 2002, will become our Non-Executive Chairman.

As you know, when I joined Navistar in August, my mandate was to serve on an interim basis and help lead the company through an important transition period. Since that time, we've made significant progress on many important fronts, and you'll hear updates on much of that as we talk about our performance on today's call.

In short, our turnaround is well underway and is gaining momentum, which is why we're now ready to put a longer-term CEO in place. Suffice it to say, I couldn't be more pleased with our accomplishments over the past 6 months, and I am truly honored to have had the opportunity to work in partnership with Troy as we set the company on a clear path forward, and we have. Troy is a proven leader, and I am thrilled that the board and I have decided that he's just the right executive to lead the company at this time. Troy has been instrumental at implementing Navistar's Drive to Deliver plan, leading the company's transition to its clean engine strategy and taking the necessary steps to improve Navistar's cost structure. I'm very confident that under Troy's leadership, Navistar will continue to build on this momentum with a focus on improving performance and quality for our customers and creating value for our shareholders.

Since I arrived last summer, I have often said I was honored to lead such an iconic American company, and that couldn't be more true today. Navistar is a great company with great products and great people. We've achieved a great deal in a short period of time, and this is in no small part the result of determined efforts of all of our employees, and I want to thank them today for their efforts.

With that, let's now turn to the quarter and let me provide some high-level remarks.

Overall, the numbers were in the range we expected. I would characterize the first quarter as one in which we made good progress in several key areas. In my mind, progress proof points that I would put at the top of the list include a strong first quarter ending cash balance, our structural cost actions are now reflected in the bottom line results and we have exceeded each of our clean engine launch milestones. A. J. and Troy will talk to you further about all of these in just a minute.

Beyond the numbers, during the quarter, Troy and his team continue to make progress on strengthening our North American core businesses while taking a very disciplined return on investment capital approach to evaluating non-core businesses and product programs for potential sale, closing or fixing.

On Page 5, you can see we've made the following progress since our fourth quarter 2012 call: we submitted our 13-liter certifications to the EPA ahead of schedule; we kicked off a best-in-class benchmarking initiative to further lower our cost, and we're already 7 weeks into that 12-week project; we completed the sale of our equity interest in Mahindra; we subleased a portion of our Alabama facility to FreightCar America; and we announced the sale of our Workhorse Custom Chassis brand.

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